SEC: Crypto firms shouldn’t forget their responsibilities

A senior figure in one of the US’ leading regulatory bodies has reminded firms which own crypto-related assets that they still have to fulfil their legal responsibilities.

Wesley Bricker, who is the Chief Accountant at the major US regulator the Securities and Exchange Commission (or the SEC), was speaking at the National Conference on Banks & Saving Institutions in Washington, DC when he made the remarks.

The conference, organised by the American Institute of Certified Public Accountants, was held earlier this week.

In his speech, Bricker pointed out that the unusual nature of cryptocurrencies did not mean that those who use them had a free pass to avoid their responsibilities – especially in the field of accurate reporting.

“It follows that changes in technology need not work against investors and the public capital markets”, he said.

“Moreover, companies must continue to maintain appropriate books and records—regardless of whether distributed ledger technology (such as blockchain) smart contracts, and other technology-driven applications are (or are not) used.”

“Distributed ledger technology and digital assets, despite their exciting possibilities, do not alter this fundamental responsibility”, he added.

Despite Bricker’s intervention, however, it’s still largely unclear which regulatory bodies are responsible for what in the cryptocurrency community.

Earlier this month, the SEC launched its first ever actions against two firms in the cryptocurrency sphere. A hedge fund manager in California, Crypto Asset Management, was accused of both untrue advertising and failing to register properly.

“The SEC entered an order finding that Crypto Asset Management LP (CAM) offered a fund that operated as an unregistered investment company while falsely marketing it as the ‘first regulated crypto asset fund in the United States’”, the SEC said.

However, there is still confusion over which organisation is responsible for each individual cryptocurrency, as the nature and characteristics of one token can resemble a security while others can resemble a commodity.

The clearest line from the SEC so far has been an interview with its Chair, Jay Clayton, which was filmed and released earlier this year.

In it, Clayton said that while cryptocurrencies themselves do not fall into the bracket of securities and are instead commodities, it’s the funding-focused initial coin offerings (ICOs) which fall into the realm of securities.

However, it is possible that these accepted definitions may change and evolve over time as cryptocurrencies become more popular – and also become more widely used and understood.

The same requirement to properly understand and categorise each type of cryptocurrency token exists around the world, too.

Just this week, for example, the boss of the Monetary Authority of Singapore’s (MAS) technology infrastructure branch told a conference that his organisation had developed a three-pronged taxonomy for working out which token was which.

Damien Pang, who was speaking at Consensus Singapore, said: “The MAS does not intend to regulate utility tokens that are used to access certain services.

“But a payments service bill is expected to be enacted by the end of this year to apply to payment tokens, which have storage and payment values”, he added.

Chris Lee

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